Even with a
deal now signed, the Obama administration still has many tools for countering
Iranís menacing behavior across the Middle East.

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The negotiations over Iran's nuclear program have finally produced an agreement.
Yet a critical paradox remains lying at the heart of the deal -- a paradox still
to be addressed by U.S. President Barack Obama's administration.

While the nuclear issue and Iran's support of terrorism are ostensibly distinct,
they are in fact implicitly linked. On the one hand, U.S. officials have made
clear that the deal is focused squarely on nuclear issues and is not part of a
grand bargain to modify destabilizing Iranian behavior in the Middle East. But
at the core of the nuclear negotiations is major sanctions relief for Tehran,
which will provide it with sufficient resources to dramatically expand its
destabilizing role in the region.

With sanctions relief tied to the fulfillment of its major obligations in the
agreement, Iran would -- within as little as six to 12 months -- have access to
what are now frozen bank accounts that total anywhere from $100 billion to $150
billion in sanctioned oil revenues. This does not even count economic gains
accrued to Iran through reintegration into the global financial system or future
oil revenue.

Senior administration officials have argued that Iran has an interest in putting
the money toward Iran's ballooning civilian-infrastructure and domestic needs.
This argument is predicated upon the notion that Iranian President Hassan
Rouhani ran his 2013 election campaign on lifting the economic sanctions and
improving regular Iranians' livelihoods. With parliamentary elections in
February 2016, the argument goes, he stands to gain politically by putting the
money into raising Iranians' standard of living.

There is only one problem: Iran is not a democracy. Supreme Leader Ali Khamenei,
who holds vastly more political power than Rouhani, is likely to financially
compensate the hard-line Islamic Revolutionary Guard Corps (IRGC) to win its
acquiescence on the nuclear deal. It is the IRGC that seeks to destabilize the
Middle East by propping up Syrian President Bashar al-Assad's brutal regime in
Damascus and furthering Iranian objectives in Iraq or Yemen. Now that this deal
is signed, it will have new funds to do so.

Even if a large majority of the Iranian financial windfall goes to invigorate
the moribund domestic economy, a relatively small slice of the $100 billion to
$150 billion can go a long way in ramping up what the IRGC is already doing in
destabilizing the Middle East. Iran's entire defense budget, according to Obama,
is only $30 billion. In the past, Iran funded Hezbollah to the tune of about
$200 million per year. But Hezbollah has much greater needs now: It has lost
roughly 1,000 men fighting alongside Iran in Syria, and many more are injured.

Even Hezbollah's leaders have publicly expressed hope that the Iran deal will
provide them with a major injection of cash, which is necessary to continue
their uphill battle in Syria.

"If Iran gets back this money, what will it do with it?" Hezbollah
leader Hassan Nasrallah reportedly asked this year. "A rich and strong
Iran...will be able to stand by its allies and friends, and the peoples of the
region, especially the resistance in Palestine, more than in any time in the
past."

The Obama administration, for its part, has pledged that it will act to counter
this windfall to some of the Middle East's most dangerous groups.

"Make no mistake; deal or no deal, we will continue to use all our
available tools, including sanctions, to counter Iran's menacing behavior,"
Treasury Secretary Jack Lew said in April. "Iran knows that our host of
sanctions focused on its support for terrorism and its violations of human
rights are not, and have never been, up for discussion. The Treasury
Department's designations of Iranian-backed terrorist groups...will persist,
giving us a powerful tool to go after Iran's attempts to fund terror."

This statement provides the foundation for one tangible action the Obama
administration could take to demonstrate -- both to its allies in the region and
to leaders in Tehran -- that it will continue to counter Iran's menacing
behaviors. It should conduct a review of all existing U.S. sanctions on Iranian
entities for their weapons of mass destruction (WMD) proliferation and prepare a
list of those that should remain in place because the designated entity is
involved not only in proliferation but also in Iran's other "menacing"
behaviors.

Beginning in 2006, the Treasury Department ratcheted up sanctions pressure on
Tehran by proactively identifying Iranian individuals and entities engaged in a
range of illicit conduct. These investigations revealed that more often than
not, Iranian entities were involved in more than one type of illicit activity
and therefore qualified for designation under multiple executive orders, such as
those for WMD proliferation, human rights abuses, and support for terrorism.

In rare cases, an Iranian entity was designated under more than one authority.
IRGC Quds Force commander Qassem Suleimani, for instance, was designated under
WMD proliferation (2007), human rights abuses (2011), and support for terrorism
(2011). But in the vast majority of cases, the person or entity was designated
only once -- under the WMD proliferation authority, which enjoyed significantly
more support from European and other allies than designations under terrorism or
other authorities. This means that a host of entities engaged in illicit Iranian
activities beyond WMD proliferation -- but that were designated solely under
authorities targeting Iran's proliferation activities -- would in all likelihood
be delisted under the Iran nuclear deal.

This applies to Iranian banks, most of which were designated under WMD
proliferation authorities but which financed a broad range of illicit conduct.
But it doesn't stop there. Consider the June 2011 designation of Tidewater
Middle East Co., an Iranian company engaged in marine and port operations in
Iran. Tidewater was blacklisted under Executive Order 13382 -- an authority
aimed at "freezing the assets of proliferators of weapons of mass
destruction (WMD) and their supporters," as the Treasury Department put it.
But according to that same Treasury Department designation, the Iranian
government "repeatedly used Tidewater-managed ports to export arms or
related materiel in violation of United Nations Security Council
resolutions." Or consider the case of Iran Air, also designated under
Executive Order 13382, which the Treasury Department noted has been used by the
IRGC to transport rockets or missiles -- sometimes disguised on flight manifests
as medicine and generic spare parts -- to war-wracked countries like Syria.

The Treasury Department has long hewed to the famous maxim: Follow the money. In
February 2010, it designated several subsidiary companies owned or controlled by
the IRGC's Khatam al-Anbia construction company. Profits from the financial
activities of these IRGC-linked companies, the department noted, "are
available to support the full range of the IRGC's illicit activities, including
WMD proliferation and support for terrorism." Following the conclusion of
the nuclear deal, the basis for sanctions due to WMD proliferation may be gone
-- but a number of Iranian concerns will remain just as guilty of supporting
terrorism as before and should continue to be sanctioned.

This is not a ruse to reimplement the full sanctions architecture in the event
of a nuclear deal, but rather a targeted means of addressing those Iranian
illicit activities that would remain. This would apply to unilateral U.S.
sanctions, but European countries could also be encouraged to follow suit,
strengthening international pressure against Iran's illicit activity beyond the
nuclear portfolio. Iran would still gain access to the $100 billion to $150
billion held in offshore frozen accounts, but not those held in U.S. banks,
which must adhere to the administration's executive orders.

Such a step is also a crucial way for Obama to make good on his promise of
countering Tehran's regional ambitions. After all, if Iran can have outsized
influence if not outright control in Arab capitals such as Baghdad, Beirut,
Damascus, and Sanaa while still under sanctions, what will its influence be
following a large influx of funds that will allow it to empower elements in its
own regime or proxies wanting to destabilize the region further?

The administration insists it will hold Iran's feet to the fire on the full
range of its menacing behaviors. With a nuclear deal in hand, the administration
needs to put forward a plan to do so. It could start here.

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David Makovsky is the Ziegler Distinguished Fellow and director of the Program
on the Middle East Peace Process at The Washington Institute. Matthew Levitt is
the Institute's Fromer-Wexler Fellow and director of the Stein Program on
Counterterrorism and Intelligence.